The boom and bust cycles or our modern financial system means that periodic downturns are inevitable. Recessions are never easy, but when times get tough the tough get going. There are always opportunities available for hungry investors who are willing to put in the work, no matter what the broader market is doing. Steven Taylor Taylor Equities is a landlord and real estate professional with years of experience in the industry who has seen success despite the market fluctuations. The tips below are helpful to investors looking to make money in a recession.
Look for Long Term Value: Recessions offer plenty of opportunity to savvy investors, but you have to look at the long term. If you do your homework, you can snatch up valuable properties for a discounted price, because property values often take a hit during periods of economic uncertainty. But, it’s important to be aware that you may take a loss in the short term, to secure a better value for the future. You may find it difficult to find tenants while the market is still in contraction. But if you can hold on long enough, your property may appreciate in value quite rapidly once the economy bounces back. Forbes suggests looking at zoning issues or liens, cap rate, the condition of the roof, and other similar metrics to determine if a property has long term investment potential.
Make Practical Investments: Luxury condos may be a moneymaker in a bull market. But in a recession, the general rule of thumb is to look for practical, conservative investments. There is always a demand for housing so no matter what the broader market is doing, so you will find buyers or tenants for modestly priced dwellings. But it will be much harder to move pricier inventory that boasts features the average buyer or tenant can live without.
Be Patient: This is good advice, no matter what the economy is doing. But it’s especially true in a recession. You will likely come across a number of attractive deals, but it’s important to understand that there are no guarantees that the market will return to exactly what it was prior to the crash. You may find any number of decent properties that are being offered for considerably less than their previous market value. But you still must do your homework to figure out which areas are likely to return to normal once the economy recovers. Periods of economic upheaval present great opportunities, but they also present a massive risk. Patience will help you weather the storm and decide which deals have potential and which will never recover.
Landlords and investors like Steven Taylor Taylor Equities have been involved in the real estate industry for decades and has been through several market cycles. You must be cautious if you’re going to invest in a recession but following these simple tips will make you better equipped to traverse uncharted waters.